Self Employment and the World of Modern Work- Update
By Harry Wall
23 November, 2017
In a further development in the area of employment classification, self-employed workers and the gig economy, Labour Senator Ged Nash has published a new bill – the Protection of Employment (Measures to Counter False Self Employment) Bill, 2017 (the “Bill”) – with the stated aim of tackling “bogus self-employment contracts that deny workers the same protection and entitlements as their employed colleagues.”
See our earlier insight for more background on this subject here.
The Bill seeks to extensively broaden the circumstances in which an employment relationship can be established between an employer and an individual, setting out that an employment relationship can be established notwithstanding that:
- The individual is also employed elsewhere;
- The individual is also self-employed in terms of other work they perform;
- The individual works as an outworker or teleworker;
- The individual performs part-time, temporary, seasonal or occasional work
- The individual’s wages are calculated on the basis of the amount of work done (piece work);
- The individual does not have set working hours or wages
In addition, regard will be had to the practical reality or “substance” of each working situation, rather than the label put on the relationship by the parties, or the wording of any agreement between the parties
The Bill sets out additionally that an employment relationship will exist where an individual enters into or works under a contract for service or apprenticeship with a person, or any other contract whereby the individual agrees with a person personally to execute any work or service.
The requirement that an individual “personally” executes any work or service is noteworthy. The requirement to perform work personally, and the ability, or lack thereof, to have someone substitute, are key factors in the developing debate around the employment status of workers.
A trade union representing Deliveroo delivery riders in the UK recently failed in a bid for statutory trade union recognition from Deliveroo on the basis that the riders were allowed under their contracts to use a substitute to do their deliveries, and some of them had done so. On that basis, they were deemed not to work for Deliveroo personally and so could not be classed as “workers”.
False Self Employment
The Bill seeks to shine a light on arrangements whereby an individual may be classified as an independent contractor, but the day-to-day working relationship is more indicative of a traditional employer-employee relationship. The Bill sets out criteria which are stated to be indicators of such an employment relationship, and in doing so appears to draw on the factors contained in the Revenue Commissioners Code of Practice for Determining Employment or Self-Employment Status of Individuals:
- Performs the same work under a contract as an employee of the entity would;
- Has a subordinate relationship to another person for the duration of the contract;
- Is required to follow the instructions of the other person regarding time, place and content of his or her work, and has no independence in relation to same;
- Does not share in the commercial risk;
- Forms an integral part of the undertaking for the duration of the contract.
Under the Bill, the Revenue Commissioners may form the opinion that a transaction, course of action or arrangement between parties has been calculated in order to misrepresent the nature of the work being performed, and as such constitutes a tax avoidance mechanism. This in turn could have implications for the employer concerned as they may be deemed to have a tax liability.
The Bill proposes that affected individuals or trade unions may refer disputes around employment relationships to the Workplace Relations Commission. It is not currently possible for individuals to bring standalone complaints regarding their employment status. Such issues tend to be heard as preliminary arguments in the course of complaints brought under other employment legislation, where an individual has to establish in the first instance that they are in fact an employee before they will have standing to assert employment rights. The Bill would give the Workplace Relations Commission the power to make awards to individuals on the basis that they have been misclassified as independent contractors.
This legislation is at an early stage and it remains to be seen whether it ultimately passes through both Houses of the Oireachtas and becomes law. What is clear however is that debate around the classification of employment, its implications in terms of workers’ rights and tax revenues, continues to intensify, and is likely to gain more focus into the future.
For more information on the content of this Insight, please contact a memebr of our Employment team.